"A German industrial giant is waging a campaign of "internal warfare" against one of its own firms - Sweden's flagship submarine manufacturer Kockums - putting key defence deals at risk, sources have told The Local.

German industrial conglomerate ThyssenKrupp bought Kockums in 2005 to form part of what is known as ThyssenKrupp Marine Systems (TKMS), a firm which also owns German submarine maker HDW, a direct competitor of Kockums.

A source told The Local that the purchase was aimed at getting rid of Germany’s Swedish submarine rival and that TKMS was jeopardizing Swedish export deals for submarines with the Australian and Singaporean governments.

"The purchase of Kockums wasn't aimed at consolidating the naval industry and creating synergies, but at getting rid of a competitor," a source in Germany with direct knowledge of the situation told The Local.

Kockums and its predecessors have been building ships for the Swedish navy for centuries at the Karlskrona shipyard in southern Sweden that now serves as the base of the company's Swedish operations.

But according to a German naval manufacturing consultant with ties to TKMS, ThyssenKrupp is actively trying to sabotage Kockums export operations to the advantage of Germany’s HDW, a strategy he dubbed "TKMS über alles" and slammed as "suicide".

The Germans' efforts to sink Sweden's submarine industry have been ongoing since at least 2011, according to the source, when TKMS CEO Hans Christoph Atzpodien denied Kockums the opportunity to bid on a project in Singapore for the construction of new submarines, despite the Swedish firm's long-standing relationship in the country.

Earlier this year, the German firm decreed that the Swedish shipbuilder officially change its corporate name to ThyssenKrupp Marine Systems, scrapping the Kockums brand name that has been a part of Swedish industry since the early 1800s.

'A raging war is taking place'

In August, during a meeting in Bonn, Germany with officials from Singapore defence agency DSTA held, Atzpodien claimed that Kockums "would no longer be capable of designing and building submarines", according to the source.

"A raging war is taking place between Kockums and TKMS," he said, explaining that the Singapore deal has brought the situation into sharp relief.

Among other things, Atzpodien disparaged Kockums plans for a new A26 class of submarine, claiming the Swedish firm didn't have enough engineers to complete the project, and that it was sure to be plagued with cost overruns and delays.

"Atzpodien has systematically ejected Kockums from the discussions and has barred Kockums from Singapore," the source explained.

TKMS has also complicated Kockums' chances for new contracts in Australia, another country where the Swedish shipbuilder has a strong presence, having designed and built six Collins-class submarines in the 1990s in what was one of the largest export deals ever at the time.

But Kockums found itself left out of a 2012 initial call for proposals from Australia to replace the aging subs with an off the shelf solution, while its German-based competitor and sister company HDW was one of three European firms asked to participate.

Earlier this year, however, Australia and Sweden did ink a deal allowing for Kockums to take part in the project, dubbed SEA 1000, which calls for the building of 12 new submarines.

But in the meantime, TKMS purchased an Australian naval defence firm, Australian Marine Technologies, that "could do the same job as Kockums could have done on its own," the source said.

"TKMS has here again torpedoed all the efforts of Kockums to run this future competition because it has already created its own footprint," the source told The Local.

A Swedish saviour?

The Swedish government, as well as officials with the primary defence procurement agency, the Defence Materiel Administration (FMV), has been made aware of the situation and have become so unhappy they have asked Swedish defence contractor Saab to look into a possible purchase of Kockums, a source within the Swedish defence industry told The Local.

"Discussions are taking place right now," according to the source, who agreed that TKMS is trying to strangle Sweden's ship building industry.

"The only reason TKMS owns Kockums is to stop them from exporting," the Swedish source explained, adding that the Swedish firm "could not exist" without export contracts.

Allan Widman, a Liberal Party (Folkpartiet) MP from Malmö and the party's defence policy spokesman said he is "worried" about Kockum's future in light of the rift with TKMS.

"Submarine building capabilities are essential for our armed forces and our ability to defend ourselves," he told The Local, adding that he had heard a number of "industry rumours" about the discord between TKMS and Kockums.

Adding to his concern is the fact that two years have passed since the Swedish parliament Riksdag approved funding for the development of the A26 submarine for the Swedish navy, but nothing has happened, reportedly due to concerns over ThyssenKrupp's ownership of Kockums.

"I hope Kockums isn't prevented from doing business with other countries. It's not constructive," said Widman, adding he would welcome Swedish ownership for the Karlskrona-based shipbuilder.

"I would have no objection to private Swedish ownership of Kockums," he said when asked about the Saab deal.

However, if the Swedish and German firms can't strike a suitable deal to resolve the situation, Widman said the dispute may require a "political solution".

"This is a matter that's vital to our national security," he said, stressing that he hopes both Germany and Sweden can maintain submarine building capacity.

"In the end, however, it may require a political dialogue between Sweden and Germany to find a suitable solution."

When reached by The Local for comment on the Saab-Kockums negotiations, a Saab spokesman refused to comment.

"We don't speculate on rumours like that," the spokesman said.

A spokesperson with FMV also chose not to comment citing an "ongoing procurement".

A spokesman with Kockums in Sweden also refused to comment on the reported disunity within TKMS, while spokeswoman with TKMS in Germany said the company was "unable to comment on market rumours"."
--------------------------------------

A comment on the above post:

"Anonymous said..."This is a matter that's vital to our national security," --- So why Kockums was offered to a German company first time? What is the problem for Sweden to buy German submarines like Poland did?

"Earlier this year, however, Australia and Sweden did ink a deal allowing for Kockums to take part in the project, dubbed SEA 1000, which calls for the building of 12 new submarines."
This is quite wrong. The deal was Sweden donated intellectual property rights to Australia.
http://www.aspistrategist.org.au/australia-and-sweden-burying-the-hatchet/
Now Australia tries to build with these rights a new Collins-class on its own - good luck!

The Collins-class disaster was partly related to the inability of Kockums to control the project properly. TKMS owned HDW has much more knowledge with license building of submarines. It worked for South Korea. [South Korea has 9 South Korean derivatives Chang Bogo class of the HDW 209 and 3 derivatives Son Won-il class of the HDW 214]

3 comments:

"This is a matter that's vital to our national security," --- So why Kockums was offered to a German company first time? What is the problem for Sweden to buy German submarines like Poland did?

"Earlier this year, however, Australia and Sweden did ink a deal allowing for Kockums to take part in the project, dubbed SEA 1000, which calls for the building of 12 new submarines."This is quite wrong. The deal was Sweden donated intellectual property rights to Australia. http://www.aspistrategist.org.au/australia-and-sweden-burying-the-hatchet/Now Australia tries to build with these rights a new Collins-class on its own - good luck!

The Collins-class disaster was partly related to the inability of Kockums to control the project properly. TKMS owned HDW has much more knowledge with license building of submarines. It worked for South Korea.

Why should TKMS allow Kockums to design a new A26 submarine while HDW at the same time works on Type210mod? Would GM allow Opel to design quite the same type of car Holden is working on?

Kockums makes fine Corvettes like the UK makes fine wings for Airbus. Great Britain will never again produce big passenger aircraft on its own.

How well of is Saab Automobile today without a big company in the background?

Very relevant comments. The problem for any buyers of Kockums submarines today is the lack of interest from it´s german owners to succeed. Not the technology in itself.

In light of the disastrous problems with the HDW U214-series (http://en.wikipedia.org/wiki/Type_214_submarine#International_setbacks) ThyssenKrupp would committed political suicide in Germany if they would have allowed Kockums to go live with export of the A26.However from the perspective of for example South Korea where HDW/ThyssenKrupp formally prevented Kockums to present a bid, it can be questioned if the result was in the best interest of the customer.

As claimed from several sources HDW was not just planning to get rid of a competitor, but also to get hold of Kockums technology. It was if course no secret when the business was done that the patents where in the formal hands of the Swedish navy (FMV), but clearly HDW and later ThyssenKrupp had expected more “flexibility” how to interprete the contracts.

Considering this background its clearly interesting that as late as February 2014 media reported that ThyssenKrupp actually had demanded that Sweden should give access to include Kockums technology in German boats as a part of deal to get the construction underway for the Swedish order of the A26, as the German owners until today has delayed the project with more than a year.

However, it´s clear that Sweden was naive selling Kockums to a competitor in the 90´ts. They expected to get better access to export markets without investing i an international market organization (and internatinal Project management as learned from the Collons Project), when they of course should have realized that a comepetitor dont have any intrest to have a Company building competing Products for the same markets.

Submarine Matters

Director, Submarine Matters International. I analyse international trends, technical and political - mainly on submarines, sometimes on surface ships, aircraft, missiles and their nuclear warheads. This website started in 2007. I have a Masters Degree (International Relations (Strategic Studies)) High Distinction average. I'm happy to do research projects commissioned by consultancies, etc. The best way to navigate this site is to put a keyword in the search box top left corner.